MacroM MacroM MacroM

Chart of the Week : U.S. 30-year mortgage rate

Macro
CD
Christopher Dembik

Head of Macroeconomic Research

Summary:  In today’s ‘Macro Chartmania’, we focus on the U.S. 30-year mortgage rate. In January 2022, it stood at 3.1%. It is now above 4%. This is only the beginning. Many U.S. households are not able to buy at the 4% rate anymore. This worsens the issue of housing affordability in the United States.


Access this week's full edition of Macro Chartmania composed of more than 100 charts to track the latest macroeconomic and market developments. All the data are collected from Macrobond and updated each week.

Housing affordability continues to be a major challenge in the United States. Home prices keep jumping (+15% year-over-year to $357,300 on average) while sales continue to fade and the inventory of unsold homes increases. Buyers are trapped. They face higher difficulties resulting both from sustained price increases and rising mortgage rates. Many of them who managed to get a 3% mortgage rate are no longer able to buy at the 4% rate. Exactly one year ago, the average rate on the 30-year loan was at around 3%. It now stands at 4.5%. This is the highest level since December 2018. The average rate on 15-year, fixed-rate mortgages, which is popular among those refinancing their homes, is up too. It is hovering around 3.4% instead of 3.09% one week ago. This is only the beginning. Mortgage rates are highly correlated to the Federal Reserve’s benchmark short-term interest rate. We expect the Federal Reserve to hike the rate by 400 basis points during this cycle in order to fight inflation. This would be similar to the previous tightening cycles which took place since 1985. We could, therefore, see the 30-year mortgage rate beyond 5%. This would be the first time since 2010. Social consequences would be massive (homebuyers dropping out from the market, breach of the social contract etc.). Owning a home is now a distant dream for a growing number of Americans. 

22_CDK_1

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.